Opportunity and Challenges in Indonesia’s Edutech Market

Over the years, the Indonesian education sector has surmounted several hurdles, but nothing could have prepared it for the shock of the Covid-19 outbreak. Indonesia, like many other countries around the world, has been scrambling to keep its education system operational since early 2020 by substituting traditional face-to-face instruction with online classes, through Edutech solutions.

With the physical restriction imposed by the government to stop the spread of the virus, there is an increasing need for online education platforms.

Key Drivers and Challenges for Edutech Platforms in Indonesia

Education technology makes use of software and hardware to help students and teachers learn more effectively. As Indonesian students become more reliant on Education technology applications to augment their learning activities, the increase in consumer expenditure is reflected in the rapid growth of the number of Education technology users. In 2019, the Education technology market in Indonesia is predicted to be worth USD 112 million, growing at a rate of 24.9% per year.

Growth Drivers of Edutech Industry in Indonesia

Inconsistent Education Quality

Even though Indonesia has a salutary teacher-to-student ratio, the majority of these teachers aren’t certified. Moreover, as competition for jobs increases, students seek assistance in academics from alternate sources. The culmination of incompetent teachers, rising pressure, and growing demand for extracurricular courses have increased students’ reliability on Edutech platforms. A survey indicated that 70% of the purchases made on a certain Edutech platform were made by the students themselves.

Huge Number of Students

More than 55 million kids attend public and private schools in Indonesia, and the figure will only increase with the government’s 12-year compulsory education policy. Moreover, the rising middle-class consumption and increasing disposable income have led to robust expenditure in the education sector. Consequently, over 59% of the population completed grade 12 in 2019, driving the demand for peripheral educational services like Edutech solutions.

The Increasing Number of Smartphone and Internet Users

With technology infiltrating every aspect of our livelihood, smartphones, and quick access to the internet have made it easier for students to do their homework and access on-the-go coaching classes on multiple subjects. Between 2020 and 2021, the number of internet users in Indonesia increased by 27 million (+16%). Moreover, by 2025, 89.2% of Indonesia’s population is expected to own a smartphone.

Urgent Need to Improve Competencies among Unskilled Workforce

The availability of talents with the relevant skill sets and competencies is critical to supporting Indonesia’s digital economy growth, with an estimated 10 million qualified workers required by 2030. In response to that, the Indonesian government issued pre-employment cards to its unemployed residents in 2020, allowing them to choose from a variety of occupational skills to master.

Moreover, millennials make up the majority of the Indonesian workforce, and they tend to be more loyal to companies that offer regular training and development opportunities, driving the demand for Edutech solutions.

Challenges of Edutech Industry in Indonesia

Unequal Quality of Educators

In Indonesia, despite the teacher-to-student ratio being healthy, the quality of educators is poor as the criteria for becoming an educator are not very robust.

On the other hand, teachers that are upskilled in digital abilities are better at promoting various mediums of Edutech solutions among students.

Limited Payment Option

Customers, especially students, find it difficult to make online purchases, such as through Edutech platforms because 66% of Indonesians are unbanked and do not have credit cards.
However, partnering with telecommunication companies can help students quickly acquire educational services that have been incorporated into prepaid mobile plans instead of using digital payment systems or credit cards.

Tapping Into Government Initiatives

Education is one of the Indonesian government’s top priorities, with 20% of the national budget dedicated to educational activities and up to USD 421.9 million set aside in 2019 to accelerate digital skill adoption. Users would be able to tap into government budgets to upskill themselves if there are opportunities to supply material and programs that correspond with government aims.

Furthermore, Government Regulation No. 34 of 2021 attempts to make recruiting foreign workers in Indonesia easier. The government has also simplified the hiring procedure for tech-based companies by eliminating the Foreign Worker Utilization Plan (RPTKA) requirement for up to 3 months.

Indonesia’s education industry is booming, thanks to the country’s expanding population and improved internet connectivity. As a result, many investors, foreign and domestic, are attracted to the burgeoning Edutech sector.

Commence Your Business in Indonesia with InCorp

Setting up a business in Indonesia can be lucrative, but it also presents several hurdles. InCorp Indonesia (an Ascentium Company) registers your company with the least hassle, while you focus on the core business aspect of your company. InCorp conducts due diligence and market research to rule out any loopholes. We also provide professional consultation and save you the management stress with our tax and accounting, HR, and recruitment services.

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